Exam 15: Investing in Bonds

If comparable bonds are paying 7 percent and the approximate market value of a $1,000 bond is $1,286,then what is the semiannual interest on the bond?

Investors purchase corporate bonds to make money through:

When investors purchase bonds that mature at regular intervals in order to balance risk and return,they are creating a:

Dick Dowen just bought a bond that is only secured by the reputation of the issuer.What type of bond has Dick purchased?

Because bonds are considered debt financing that must be repaid at maturity,the corporation's financial stability has little effect on the bond's value between the issue date and the maturity date.

A provision in the bond indenture that forces the corporation to make arrangements for bond repayment before the maturity date is called a ____________ fund.

You are a taxpayer in the 28 percent tax bracket and you own a tax-exempt bond that pays 5 percent.What is your taxable equivalent yield?

Maturity dates for intermediate term corporate bonds generally range from 3 to ___ years.

To calculate the taxable equivalent yield on a municipal bond:

Frank Riley just purchased a bond that is unsecured and is secondary to other unsecured bonds should the issuer default on interest payments or repayment at maturity.What type of bond has Frank purchased?

Anyone who is in physical possession of a _____ can collect interest payments and the face value of the bond at maturity regardless of whether or not they are the rightful owner.

A general obligation bond is a bond that is repaid from the income generated by the project it is designed to finance.

To calculate the current yield for a T-bill:

Because of the added security of collateral,the interest rates on _____bonds are usually lower than interest rates on unsecured bonds.

Which of the following bonds would have the lowest interest rate? All of the bonds have 10 years to maturity.

When a treasury bill matures,the investor receives:

A $l,000 corporate bond is convertible to 25 shares of the corporation's common stock.What is the minimum price that the stock must obtain before bondholders would consider converting the bond to stock?

In reality,there is no guarantee that convertible bondholders will convert to common stock even if the price of the common stock does increase.

Which of the following can cause the price of a corporate bond to fluctuate until the maturity date?

The current yield for a corporate bond is determined by dividing the annual income amount by the current market value.